Non-ciliated Clara cells comprise a majority of the mucosal cell population in peripheral lung bronchioles. Morphologic and histochemical studies suggest Clara cells have a secretory function. The possible importance of Clara cells in toxic reactions of distal airways has come to light with the demonstration of high mixed-function oxidase (MFO) enzyme activity. Chemical toxins including carcinogens require MFO-catalyzed activation to form cytotoxic and/or carcinogenic metabolites. It has been shown that Clara cells respond adversely to hydrocarbons, ozone, nitrogen dioxide, hyperoxic conditions and cigarette smoke and are, therefore, likely to play a key role in the initiation of pulmonary injury and disease. Our objectives are to investigate the function of Clara cells by developing in vitro cell and organ culture models with which to examine factors and mechanisms that induce and control Clara cell proliferation, differentiation and secretion.